Greetings. Welcome to Kandi Technologies First Quarter 2024 Financial Results Call. Please note, this conference is being recorded. I will now turn the conference over to Kewa Luo, Investor Relations Manager. Thank you. You may begin.

Thank you, operator. Hello, everyone. Thank you for joining us on today's conference call to discuss Kandi's results for the first quarter 2024. Earlier today, we issued a press release covering the results. You can find a press release on the company's website as well as from the newswire services. On the call with me today are Mr. Xiaoming Hu, Chairman of the Board; Dr. Xueqin Dong, Chief Executive Officer; and Mr. Alan Lim, Chief Financial Officer. Dr. Dong will deliver prepared remarks in Chinese, which I will then translate. After that, we will have a Q&A session. Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the expectations expressed today. Further information regarding these and other risks and uncertainties is included in the company's public filings with the SEC. The company does not assume any obligation to update any forward-looking statements, except as required under applicable law. Please note that unless otherwise stated, all figures mentioned during the conference call are in U.S. dollars. With that, let me now turn the call over to our CEO, Xueqin Dong. Go ahead, Dr. Dong.

Hello, everyone. I'm Xueqin Dong, the CEO of Kandi Technologies Group. Welcome to today's conference call. We are pleased to report a solid start to the year, with total revenue for the first quarter approximately $20.7 million and net income around $0.8 million. Despite some fluctuations in sales and overall income due to adjustments in our sales strategy, our expansion in the North American market is progressing smoothly through collaboration with large nationwide chains. We have also made advances in the Southeast Asian and European markets, laying the groundwork for robust sales in the upcoming peak season. We are proud to highlight our stable balance sheet and healthy financial condition. Additionally, we have repurchased 564,302 shares this quarter, reflecting our confidence in the company's future growth. Currently, we are actively refining our product portfolio. In the first quarter, we have begun rolling out our rechargeable AA batteries to the market. Looking ahead, we are excited to introduce starter batteries and a more competitive lineup of all-electric off-road vehicles and electric water sports products. We anticipate these new products will significantly drive our sales revenue upward. At the same time, we are gearing up to launch our limited edition golf cart collection. This unique series, created in partnership with the National Football League and Lowe's, will feature branding for all 32 NFL teams. This initiative demonstrates our confidence in our future growth and our commitment to delivering value to our shareholders. I am confident that our strategic adjustments will receive strong support from our shareholders. Now we will move on to the Q&A session. Chairman Hu Xiaoming and I will answer your questions. Ms. Kewa and Mr. Alan will provide translation for English questions. Please go ahead and ask your questions.

Our first question is from Michael Pfeffer with Oppenheimer & Company.

On the year-end 10-K press release, it was good to see the CEO for the first time mentioning Lowe's and making what appears to be an attempt at a very positive comment for the balance of this year. However, I assume due to a translation error, which should have been a positive statement, ended up putting a negative spin on the stock that started the severe price decline. Management was immediately notified of the error, which should have been immediately corrected, but instead chose to ignore it. Here is an excerpt from the PR that contained the confusing error. Do you want to just translate that quickly? Dr. Dong, CEO of Kandi commented, we acquired Northern Group to expand our sales channels. Moreover, we further strengthened our partnership with Lowe's, expanding to more than 10 supercenters in 2024 and thereby broadening our market coverage in North America. We're proud to return to profitability in 2023, marking an important milestone in our development journey. Lowe's refers to each of its 2,500 supercenters in their advertising and promotions. The PR in question was the first time Kandi has even admitted in a PR that Kandi was stealthily doing business with Lowe's since mid-'22. Without correcting that error in the PR, it gives the impression that Kandi is excited about Lowe's adding another 10 of the supercenters. When in reality, Kandi at that time had long since opened up all of its 2,500 stores based on store managers' discretion by last year's end. Please translate that. Also on the last conference call, Mr. Hu in response to questions stated, so for this year, on top of what we are working with the Lowe's superstores, we have now added the collaboration with more than a dozen or so of the retail chains with different scales, currently working on trial sales in those superstores. In addition, on top of the cooperation of the supermarket, we are working with the dealership with more than 300 partnerships during '23. And in this upcoming 2024, we are trying to work with more than 1,000 dealerships in the U.S. market. If you can just translate that, and I'll get to my questions quickly. Okay. So the questions. Since Kandi products were already available in all Lowe's supercenters at the time of the prior PR quote, what specifically was the CEO attempting to refer to with this partnership with Lowe's expanding to more than 10 supercenters in the 2024 'to broaden market coverage'?

So first of all, in the last conference call, we mentioned that Lowe's is one of the retail partners we are working with. I want to clarify that we do not have access to all 2,500 locations; rather, this aspect of our collaboration is still growing based on our negotiations and partnerships.

So Mr. Hu would also like to add more color that, as I just mentioned just now, we don't really have access to all 2,500 of these retail stores of Lowe's. And currently, we have roughly 500 stores; although maybe not all of those 500 stores carry all of our products—it depends on the category of the products and type as well. But in the next few months, we hopefully will expand the retail stores working with Lowe's up to like 600 or 900 by the end of the year. We expect the stores that will cover our products will be over 1,000. And of course, that's our plan for now. So you're going to be clear on the collaborating scale with them.

That gives some clarity. Regarding Mr. Hu's comment on the last conference call, was this dozen or so retail chains with different sales currently working on trial sales confused with the CEO's comments about the Lowe's superstore sales in the year-end PR? So can you just kind of explain a little bit more about that comment? Was it related to the trial sales on the Lowe's superstores?

So first of all, I believe there has been no confusion because we keep emphasizing that we are working with over 10 retail partners, and Lowe's is one of them. For the list of those partners, you can check our Kandi America website. Regarding the trial sales, are you asking if the sales volume is small? Are you referring to the sales of the child products? Currently, we are selling a variety of our outdoor off-road products like the golf cart, UTVs, and ADBs through those partners. I hope this addresses your question.

Yes, just I think the trial sales was sort of your quote. So I guess I'm trying to understand maybe what type of products are the trial sales? Can you delineate that? Or is that not what you meant by trial sales?

Can you remind us where the quote is when you refer to trial sales?

Yes, I'll have to find that.

Okay.

Yes, here it is—yes, I think it's a quote when—I said it on the last conference call, Mr. Hu in response to a question stated: So for this year, on top of what we're working with the Lowe's superstores, we have now added that collaboration with more than a dozen or so of the retail chains with different sales, currently working on trial sales in those superstores. I believe that's a quote from Mr. Hu; if I'm wrong, I'm wrong, but that's what I...

During the call not in the press release...

I think we mean trial, not the child. The trial sales.

Trial, that clears it up. Trial. Thank you.

I'm sorry, let me translate this first. Okay. I'm sorry. Operator, yes, we can take the next question.

Our next question is from Steve Miller, private investor.

In response to the previous question, if you would consider providing a transcript of your Q&A call instead of relying on third parties, it would help clear up many misstatements or misunderstandings. Otherwise, unclear statements are often taken out of context. My first question pertains to the Lowe's NFL partnership. Last week, Lowe's began promoting a new line of Kandi golf carts through their Google ads and launched a dedicated landing page on their e-commerce site as part of their $100 million annual NFL sponsorship. Each of the 32 NFL teams is expected to have their own custom-branded Kandi golf carts available for sale in August. This weekend, shareholders were excited to see three pages on Lowe's website showcasing these customized carts and inviting advanced orders for August delivery. However, it seems Lowe's has removed those landing pages, which was surprising, especially considering they have been working on this project for some time. The sudden removal was unexpected, as was the deletion of the post from Kandi America's Twitter account. Today, you will likely announce the Lowe's NFL partnership in your press release. So, what is the status of this new Lowe's NFL golf cart offering? It's a great idea that should be heavily promoted by both Kandi and Lowe's, as it will not only boost Kandi's sales but also enhance your credibility. That's my question.

So first of all, there are actually only 32 teams in the NFL, and Lowe's is the exclusive partner of the NFL to sell the golf cart branded by Kandi. Regarding the website you mentioned, we believe that some adjustments are being made. We expect that all the information on the website will be restored with the latest news and product details by next week. This is a significant opportunity for us, Kandi, and we hope it can enhance our brand visibility even further.

Great. And then my related question, what other products can we expect here to be selling through the Lowe's Kandi NFL relationship?

Currently, the products being sold between Lowe's and NFL under the Kandi brand are golf carts. We will see how this develops in the future, but for now, that is the product.

Okay. My next question is regarding your consultant and the proposed spin-off. On the past two conference calls, questions were asked about a statement in your 10-K disclosing a consultant who was hired back in May of 2023, with the contract to terminate once the consultant was paid 300,000 shares of Kandi stock worth $1 million. Alan had responded that the consultants were hired for your plans of the U.S. subsidiaries as one separately listed public company. Nothing else was said. Go ahead and translate that. If I understand your intent, it would be a NASDAQ listing, Kandi would retain a majority share position. The spin-off would release value of Kandi not represented in the current fair price and allow it to book as a separate company its own sales and P&L. Based on NASDAQ minimum prices and market cap, however, logic would seem to make it mandatory that Kandi's stock price has to be trading at least 3 or 4 times higher than currently to get an underwriting sponsor firm to manage the IPO. Kandi's shares have done nothing but go down since the consultant was hired. Can you go and translate that? Okay. My question is, what value has the $1 million consultant contract brought to Kandi, given where Kandi's share price stands today? And what is the contract's current status as a consultant being retained again or will be in the near future?

Even though the contract may have expired, the related process continues to progress, and we believe the consultant fees will not be wasted.

I mean, do you anticipate the spin-off will be finalized this year?

The plan is to proceed with the dual listing, which is a spin-off involving two separate concepts. The process is being managed in an orderly fashion. If everything goes as expected, we hope to complete the entire process by the end of this year.

Are you anticipating any new Kandi American acquisitions to be made before the spin-off will be consummated, for example, additional distribution and manufacturing facilities?

We don't have such a plan or consideration for now.

Was the consultant Patrick Cowen's company? Or is it someone else? And why can't you disclose that in the SEC filings?

Are you asking who this consultant is? How come we don't disclose it in the SEC filings?

Yes. Yes.

Actually, according to SEC disclosing guidance, we don't have to disclose the name of our consultants because they are not underwriters. I hope that answers your question.

Understood. Can you comment on the impact of any of the recently announced tariffs on EVs and lithium batteries?

I'm sorry, Steve. You're a little bit skipping your voice. Can you repeat the question?

Sure. Can Mr. Hu comment on the impact, if any, of the recently announced tariffs on EVs and lithium batteries that was recently announced?

Our golf cart product, which is currently a significant revenue stream, is not affected by the electric vehicle tariffs. Therefore, the 100% tariff will not influence the sales of our golf carts. Additionally, the tariff on our lithium batteries has risen from 7.5% to 25%. We plan to respond by cutting costs and other expenses to maintain the competitiveness of our products. Regarding the UTV product, although the tariff has not yet been announced, we will look into using the CKD approach to produce electric UTVs in the United States to mitigate any potential tariff impacts. I hope this answers your question. Thank you.

And then the picture that Kandi America posted on their site. It showed Kandi America folks posing with the mayor of Laredo, Texas, with other locals in the middle of the field, not my curiosity, why did Kandi America post that image and what should we take from it?

Can you repeat? The picture with who?

There was the Twitter Kandi America. They posted an image of Kandi America folks posing with the mayor of Laredo, Texas, with other local...

Well, it's primarily for us to investigate the opportunities and potential. At this moment, there isn't much substantial progress.

Okay. And my last quick question is, who currently is the CEO of Kandi America?

The CEO of Kandi America is Johnny Tai, and this information is also available on our website.

Okay. The Barry golf carts had put out a press release and had referred to someone else. Thank you very much for your response. Appreciate it.

Our next question is from Terry Mclemore with Mclemore & Associates.

Two quick questions. First one is, can you give us an update on sales that are international, such as the retailers internationally that we're selling our golf carts through? That's the first question. And then the second question, can you give us guidance for the rest of 2024, and I know I'm just asking for a best guess here and maybe also for the calendar year 2025?

Let's go one by one. Your first question is...

Yes. International sales, who the retailers are, what percentage...

International sales? Okay.

Currently, we are trying to expand our sales to regions such as Southeast Asia and Europe. However, the scale is not large, but we are aiming to grow in the future.

So no names that you can give us on that?

As for the sales to those regions we mentioned earlier, we actually work with trading companies and agencies in China. So we don't engage with those channels directly.

Okay. Well, then can you give me any kind of guidance—best guess guidance for the rest of 2024 and 2025? I know last year, you talked about maybe doing $500 million in sales in 2025, but that may be a stretch at this point?

We believe that total sales for the entire fiscal year 2024 will be an improvement over last year. For the target in 2025, we are still aiming to maintain it at $500 million and are working diligently to achieve this goal. Thank you.

Our next question is from Fred Bracher with Concor Investments.

Last week, Kandi America gave a peek on its homepage and Twitter page under Golf carts of the new $9,900 Kandi smile. Similar, by the way, to a modern-looking Kandi Coco. What markets do you anticipate this new Kandi will attract? And how big a market do you expect this vehicle to go in both golf and LSEV configuration? I have another question after that.

First of all, this is a new type of product in a convertible format. It is primarily designed for recreational use, specifically for cross-border golf cart utilization. For additional specifications and details about the product, please stay tuned for updates on our website.

Also, are there other legacy vehicles such as Coco that can be resurrected to as new generation EVs over the next few years?

Ongoing, we will primarily focus on our newly developed pure electric vehicles in categories such as the golf cart, ADV, and UDV.

A quick question. Any intention to keep buying Kandi shares?

You mean for the company? Are you asking about the continuation of share buybacks?

Yes.

Correct. We will continue to repurchase the shares of Kandi.

Our next question is from Arthur Porcari with Corporate Strategies.

Thank you. Aside from the exciting news about the Lowe's NFL collaboration announced today, what new products does Kandi have for this year that we might not be aware of? In the last conference call, management was asked multiple times why they were not providing updates on new products through press releases and why Kandi doesn’t report both GAAP and non-GAAP numbers, as many analysts prefer. We were told this would be considered in the future. However, management has not improved its communication about breaking news, and it has been over six months since the last press release. The most recent update from corporate was about the NASDAQ News retrieval regarding Kandi Technologies' stock repurchase authorization. While the Kandi NFL announcement today is a welcome development, it raises questions about the lack of other updates. Since last November, Kandi has expanded its product offerings from the single Coleman model to now over a dozen conventional golf and LSEV carts, new patented mini and mini-sized carts, two UTVs, a $3,000 GoCart, and three high-end e-bikes. Shareholders have found these details largely through retailer ads online, with limited support from Kandi's IR department. The current stock price demonstrates a loss of respect in Wall Street due to the lack of updated information. For instance, Kandi has added Walmart, Kemper, Costco Canada, and PV Corp as outlets, totaling thousands of potential locations. Kandi has successfully transitioned into a key player in the electric off-road business model within the growing electric vehicle market. However, shareholders feel that management has shown indifference towards new investors on Wall Street. Based on the year-end 2023 results, Kandi appears to be significantly undervalued, trading at a discount to its cash, book value, and net working capital. I have some questions. I have four questions and a couple of additional points. Does management, which owns only 17% of Kandi's stock, have any concerns that a Chinese entity could come in, make a buyout tender offer, and double the current price? They could end up purchasing the entire company at a discount to its book value of $5 per share and also manage to gain control by utilizing Kandi's cash of $2.90 per share.

Thank you very much for your concern. We will carefully evaluate and take appropriate measures to avoid such risks. Thank you.

Okay. That's not much of an answer, but let's go on to the next question. Why is management wasting shareholder value by paying for three different IR groups each month but not taking the good advice that I'm sure each has at times offered? And if that's not true, if they haven't offered that, that's a good reason to fire them all.

Currently, we only use one investor relations firm, which is the Blueshirt Group. We don't have a separate investor relations team. As the company is undergoing strategic changes to focus more on golf cart vehicles in the U.S. market, we believe in doing more and speaking less. As our strategy evolves, we will take a more proactive approach in updating our communications and investor relations strategy. Thank you.

Actually, I think you do—well, you certainly have 2, if not 3, because Kandi America seems to use a trained IR group. And sometimes that pops up the press releases, but most of the time does as far as Wall Street news services are concerned.

You mentioned American trade? Is that the name of the IR?

I don't know whatever it is. An IR firm that Kandi America uses.

We believe that we work with some separate IR teams on a contract basis for U.S. entities. However, at the group level, we employ one IR firm dedicated to our public information for investor relations purposes.

Well, I just find it hard to believe that with everything good that's going on after 15 years with Kandi now, where we used to do 40 press releases a year, now we're doing almost none when it comes to breaking news. I think it has to do with the splitting of the IR responsibilities, it seems like the parent company should be the one that puts out the IR, just an opinion.

Yes, I believe we will make the necessary adjustments in the future, and you will see the ongoing results. Thank you.

Okay. Onto my rest of my questions. Several years ago, management promised shareholders that once Kandi had a predictable growing revenue stream, the company would start giving revenue and earnings guidance, mandatory to attract analysts and institutions, particularly in this competitive stock market. Over the past three years, despite a much stronger balance sheet, Kandi's institutional holdings have dropped from a peak of 15% to 3.6%. Can management give any reason why it refuses to confirm to the Wall Street desire for guidance and also non-GAAP, in addition to GAAP numbers, as it did in the last two quarters—I'm sorry, they did in the last two years of the prior CFO's term?

Thank you for your suggestions. We will evaluate and consider your feedback and incorporate it into our processes. Thank you.

Okay. Last conference call, saw a response from Mr. Hu that some management would be considered personally buying back shares in the open market as they did three years ago when they paid more than double the current price personally, and the time cash in the bank was but a fraction of where it is today. Open market company share buybacks are appreciated, but due to Kandi's low daily volume, the 20% average volume maximum number of shares that can be purchased under the current 10b5 plan has been limited to maybe 15,000 or 20,000 shares per day. Why doesn't the company just make a straight $3.50 a share tender offer for at least 10 million shares of stock, which would only use 15% of its cash? I doubt it would be fully subscribed due to the stock quickly jumping above that price once shareholders realize management is serious about increasing shareholder value. Most importantly, such an action by an EV-related company in this specific market would get a lot of attention that one could not afford to pay for.

Thank you for your suggestions, we appreciate them. We will consider them and respond appropriately.

Okay. Well, these are my formal questions that I had for you, but I have just a few questions on what was recently announced today and what we've said on the conference call. I might add that as I addressed earlier in my comments, we keep getting this same thing; we'll take under consideration, take under consideration. We've been hearing that for years now. But... go ahead and pass that on, and I'll go on to some follow-ups on the news that just came out.

Yes, we're listening and we will consider the concerns you raised.

Okay. No, these are just some follow-ups on what's been said. Regarding the Lowe's 500 stores, I hold personally enough done in my Houston area, at least 3 Lowe's stores, and 2 of them I actually know the managers in that department, and they were under the impression that Lowe's had all 2,500 stores or whatever it is, all 2,400 stores available to be buying Kandi's products. But I guess it's good news if we've been doing what we have with only 500 stores. And I can't believe that this NFL thing that we're doing now isn't going to probably expand to almost all the stores. Well, that was actually a question, but... Okay.

What's the question you've said?

Well, that was a question I had specifically about that subject that I was talking about the 500 stores. If they had any further comments— they probably don't have any further comment on that, but anyway, that's just what I've heard from the Lowe's managers. Okay. This one is interesting. I've said over the past few years, I chatted the company into how soon it would be able to pass Polaris. I think Mr. Hu made a comment on that a few years ago once we got involved in this industry, but what fascinates me is the missing link to Polaris is water sports. Today's press release actually mentioned we're getting into water sports. So I'd like more explanation what that's all about.

I'm sorry, can you repeat your question one more time?

Okay. What I'm saying is that in the past, I had chatted management by kiddingly asking them how soon they could pass Polaris in this off-road vehicle industry. But the missing link at that time to Polaris is Polaris is well known also for its water sports. So my question is, today's press release specifically mentioned water sports as being a new product line you're getting into. Can you expand more on what that water sports is about?

We are focusing on our own development of new products, particularly in the areas of pure electric off-road vehicles and water sports products. Our aim is not to compete with others but to concentrate on our own innovations. Currently, most water sports products in the market, such as the sports and fishing yard, use gas, which can be noisy and disrupt the fishing experience. Therefore, we are researching and developing purely electric water sports products. We hope to have more updates to share as we progress in our development.

Are we talking wave runners here like Polaris has? Or are we just talking like motor—electric motors for fishing boats? What are we specifically talking about water sports or both?

Currently, we are focused on developing small-scale water sports products, such as fishing boats and individual yachts, as part of our research and development efforts.

I assume you mean by 1 million yacht wave runners or jet skis?

Yes, it's more like jet ski-type products.

Oh, that's great. It's super.

To clarify, when we refer to the jet ski, those are just the comments we've received in the market. What we're actually aiming for is more akin to a speedboat or a yacht, which can accommodate one person. So, it's not exactly a jet ski, but it's more about the style of the boat, similar to a speedboat that is designed for just one individual.

That sounds like a whole new product line that probably...

We are working on a new innovative product for the market. It differs from the typical water sports items currently available.

So it would probably be a patented situation like the mini was that you released earlier this year.

That will be under patents.

Another one of our own patents. Okay, I'm just about done here. The potential is NFL collaboration to me is just incredible. I can't imagine maybe you should take off a 6-passenger golf cart and back off the back seat in it and put a part on to grow back there. It's—people like to do that kind of stuff at sports events in the United States over here. But anyway, that's just a comment. So let's see here. Well, I guess the highlight of this was I'm glad to hear that 2025 estimate of $500 million is still a target of Kandi—sorry about this, I'm sorry about the phone ringing over here. Anyway, as I said, I think that the $500 million 2025 number should make a dramatic difference in the stock price. If we can just get the story out. One last question, too. You've mentioned that you're already in 10 more—10 big box chains already, if I understood earlier correctly, we only know about 5, at least that I'm aware of. So at some point in time, will we be disclosed who the other 5 are?

Currently, we are collaborating with over ten different retail partners, although the scale of these partnerships varies, with some being larger and others smaller. We plan to gradually disclose this information on our Kandi America website. You can find details on our vendor list or channel list. Moving forward, we will aim to provide more frequent and detailed updates regarding our retail partners on our website.

Okay. Well, thank you very much. A little bit disappointed in the revenues this quarter, but you've done a big expansion and have a lot involved in getting this stuff to roll out. But this NFL thing sticks in my mind as being something very huge for the latter part of this year and in the future years. But other than that, pretty good job. Thank you.

There are no further questions. At this time, I would like to turn the conference back over to management for closing remarks.

Thank you again for joining today's conference call. If you have any further questions, please don't hesitate to contact our IR, Blueshirt at [email protected], or you can contact us directly at [email protected]. We look forward to updating you on our next earnings call. This concludes our call for today. Thank you very much. You may now all disconnect.

Thank you again for joining today's conference call. If you have any further questions, please don't hesitate to contact our Investor Relations team at [email protected], or you can reach us directly at [email protected]. We look forward to updating you during our next earnings call. This concludes our call for today. Thank you very much. You may now all disconnect.